As an electric distribution company, PECO is focused on the safe and reliable delivery of electricity to area homes and businesses. While we are focused on the poles and wires, we do not own power plants or generate electricity, so we need to purchase energy for our customers through competitive market-based contracts. Specifically, we do this for customers who are not shopping for their electricity, better known as default service customers.
PECO and other utilities are required to file plans with the Pennsylvania Public Utility Commission (PUC) every four years, outlining how they will procure energy for their customers. These Default Service Plans are reviewed by the PUC and other interested stakeholders through a closely regulated process, and ultimately must be approved by the PUC.
We recently filed our Default Service Plan with the PUC, which outlines our approach for the period between June 1, 2025, through May 31, 2029. Want to learn more? Let’s take a closer look at our energy purchasing strategies and some of the rules and regulations that are in place to protect customers and the environment.
What Do the Regulations Require?
Least Cost is Key
Laws and regulations are put in place to protect customers, including our low- and moderate-income customers, from paying above-market prices for their energy use. PECO is required to purchase electricity at the ”least cost over time” and pass these costs along to customers at the exact cost the company pays, with no markup. PECO is also required to ensure “adequate and reliable service” to meet the increasing demands of our customers.
How do we accomplish this? We secure a “prudent mix” of short- and long-term contracts from various sources, ensuring that our customers are paying the lowest price possible and protecting them against spikes in energy prices.
- Short-term contracts, with one- and two-year term lengths, purchased twice a year. This helps us to ease the volatility of wholesale power markets and prevent spikes in energy costs.
- Long-term contracts with four-to-20-year term lengths, which help us provide price stability by locking in prices over an extended period.
PECO’s proposed Default Service Plan largely follows our previous plan, which was approved by the PUC in December of 2020, and is designed with these rules and regulations in mind.
Promoting Alternative Energy Sources
Under Pennsylvania’s Alternative Energy Portfolio Standards, PECO and other electric utilities are required to include a specific percentage of electricity (currently 18 percent) from alternative resources including solar, wind, and hydropower in the electricity that they purchase for customers.
We meet this requirement by obtaining Alternative Energy Credits (AECs), which are used to track and verify generation from renewable sources. Through our recently filed plan, PECO will continue to obtain credits from energy suppliers while also expanding our Solar Credit Procurement Program, which helps us meet our obligations while also supporting the development of solar energy right here in Pennsylvania.
Leading the Greater Philadelphia Region’s Transition to a Cleaner Energy Future
Beyond our energy procurement process, we continue to be supportive of driving the transition to cleaner and greener energy in a way that is equitable, affordable, reliable, and keeps customers and their energy needs at the center of it all.
Our Path to Clean commitment includes goals to reduce our operations-based emissions by 50 percent by 2030 and achieve net-zero emissions by 2050. We are doing this in part by electrifying our vehicle fleet, focusing on energy efficiency for our buildings and operations, and modernizing our natural gas infrastructure to minimize emissions and increase safety.
But it’s not enough for us to reduce our own emissions – a key part of our commitment is supporting customers in their efforts to embrace cleaner energy solutions and reduce their environmental impact. PECO is supporting our customers by offering energy efficiency programs and incentives, supporting customers who choose to install solar, and offering a variety of tools and incentives to make it easier to adopt electric vehicles. We are also making targeted investments in our electric distribution system to pave the way for these cleaner energy resources throughout southeastern Pennsylvania.
As a company, we are committed to playing a leading role in the Greater Philadelphia Region’s transition to a cleaner energy future. We look forward to the opportunity to engage and hear from our customers, communities, and other stakeholders as our latest filing is considered by state regulators.